Suzuki Motor aims to boost 2008 sales through Asia growth

YoshioTakahashi

(Adds comments by chairman, regional sales projections.)

TOKYO (MarketWatch) -- Suzuki Motor Corp. (7269.TO) is looking to boost worldwide sales in 2008, banking on higher sales in India and other growing Asian markets to make up for lackluster demand at home.

The Japanese maker of small cars and sport utility vehicles said Thursday it aims to lift worldwide sales 7% to 2.55 million vehicles this year. It set an overseas sales target of 1.87 million cars, up 10% from last year.

Suzuki, in addition to making motorcycles, is well known for its relatively low-priced, fuel sipping small cars. Those cars are especially popular in India, where the company has about 50% of the fast-growing market through its subsidiary Maruti Suzuki India Ltd.

"Asia will be a driving force" of the company's growth, said Chairman and Chief Executive Osamu Suzuki at a press conference.

The company is the latest Japanese car maker aiming to boost sales this year despite worries that the global economy will be dragged down by the U.S. subprime loan crisis.

In late December, Toyota Motor Corp. (7203.TO) and Honda Motor Co. (7267.TO) also forecast increases in worldwide sales for 2008, based on predictions for stronger sales overseas.

Suzuki's upbeat projection underscores its confidence that demand for small cars will keep growing as stubbornly high gasoline prices boost demand for small, fuel-efficient cars. The company believes its relatively inexpensive products will continue to appeal to consumers in emerging markets such as India.

Suzuki, which makes the Swift compact and SX4 SUV, aims to boost sales by 8% to 765,000 vehicles in 2008 in India.

Its latest sales target follows a 19% jump in sales to 710,000 in the South Asian country last year.

Suzuki also hopes to sell 191,000 cars this year in China, 12% more than last year's 170,000 and a big improvement on its 1% sales growth there in 2007.

Even as it expects sales in these two major Asian markets to grow, it is concerned that fallout from the U.S. subprime mortgage crisis could put a damper on the Indian market. Whether booming auto demand in China will continue after the Beijing Olympics this year is also a concern, the chairman said.

The company forecasts sales in Southeast Asia will rise 29% to 112,000.

It anticipates slower growth in other major markets. Suzuki is targeting an increase of 5% to 360,000 vehicles in Europe and hopes to sell 122,000 vehicles, up 7%, in North America.

Suzuki is cautious about the prospects for mini cars in Japan, a segment where it has an advantage over other domestic car makers. It projects total domestic demand for mini cars, which have engine displacements of 660 cubic centimeters or less, to fall to 1.85 million-1.90 million vehicles this year from 1.92 million in 2007.

"Not only mini cars or automobiles, but overall consumption will likely fall" in Japan this year, given the country's slowing economy, the top executive said.

But the company is looking to maintain the same sales volume this year as last, when it sold 676,000 vehicles, hoping its new products will spark demand.

In 2007, Suzuki sold 2.38 million vehicles worldwide, up 9%, and built 2.60 million, 11% more than the previous year.

Asked about the ultra low-priced Nano subcompact unveiled earlier this month by Tata Motors Ltd. (500570.BY) at an auto show in India, Suzuki's chairman reiterated that his company will "take time to think" about whether it needs to offer such a low-budget car.

Tata hopes to attract motorcycle owners in India who want to upgrade to an affordable car. The Nano is expected to cost about INR100,000 ($2,500).

The chairman said the company needs to keep an eye on the yen, which has recently been climbing.

Suzuki is basing its forecasts on an exchange rate of Y105 to the dollar and Y145 to the euro for the next fiscal year, the chairman said. These levels are unfavorable compared with the average rates of Y112 to the dollar and Y147 to the euro forecast for current fiscal year ending March because a stronger yen reduces profits earned overseas when converted into yen.

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